What is a just price? On the face of it, this might seem like a fairly arbitrary question; in a capitalist, free market economy, businesses seek to maximise their profits, and thus charge consumers the highest price that they are willing to pay. However, is it fair for a business to protect their profit margins in a time of inflation and a rising cost of living, taking advantage of the fact that the consumer can still afford to pay this higher price? Alternatively, is it fair for the wealthy tourist to haggle over a couple pound’s worth of goods in a local street market, a sum relatively inconsequential to their well-being but perhaps mattering a great deal to the trader? These questions are still pertinent today, but back in the 13th Century, as Europe was emerging from the Dark Ages and trade began to flourish, issues of value and just price became the subject of great philosophical debates, from which rose the thoughts of the Scholastics.

Scholasticism was a system of economic thought that came to prominence due to the coinciding of the creation of the first universities and the rediscovery of Ancient Greek texts which had previously been lost during the Dark Ages. This gave medieval churchmen and scholars the chance to apply the teachings of the Catholic Church to guide them in approaching economic issues touched on by the Greeks. Although economic principles have been present in societies stretching back to the Ancient Greeks and Romans, the Scholastics were the first to question these fundamental principles of value and price, and their ideas could be considered the first school of economic thought.

When considering the question of value, the Scholastics drew on the writing of Aristotle in his book Nichomachean Ethics, where, taking the example of an exchange between a builder and a shoemaker, he wrote of the need to equate the value of these goods to each other, such as through money, in order to facilitate a fair exchange for both parties. In attempting to determine the respective value of a good, two distinct lines of thought emerged amongst the Scholastics. Robert Grossteste (1168-1253) suggested that value can be measured through usefulness, necessity, and desire, hence developing the demand side of price theory; while Albertus Magnus(1200-80) linked value to the inputs from the producer, such as time, materials, and labour, beginning the supply side of price theory. These ideas were themselves a development from the Romans, who had stated that “Everything is worth what its purchaser will pay for it” . Later Scholastic thinkers then further expanded on the ideas of Grossteste and Magnus, such as Gerard Odonis (1290-1349), who distinguished between skilled and unskilled labour; he supposed that skilled labour, being scarcer than unskilled labour, would be of higher value, and therefore so would goods made with skilled labour.

One student of Magnus, and possibly the most famous Scholastic thinker, was St Thomas Aquinas. Aquinas drew on the ideas of Grossteste and Magnus, recognising the importance of both their thoughts and adding his own distinction between economic valuation and natural valuation – for example, while a horse may be more useful and beneficial to own than a diamond, a diamond commands a higher price.

Aquinas was one of the first scholars to comment upon the idea of a ‘just price’ – a price that is fair to both parties in an exchange. Magnus had emphasised the importance of the producer getting a fair price for his goods, or else there would be no incentive to supply and society would perish, but Aquinas considered too the importance of fairness to the purchaser. He stated “to sell a thing for more than its worth, or to buy it for less than its worth, is in itself unjust and unlawful.” While this might seem a relatively simple concept today, in the era it was a significant advancement in economic thought. The key point of Aquinas’s statement was that it incorporated the notion that it was unjust to take advantage of a consumer’s need: if a good cost a great deal to be produced, then a producer could sell at a great price, assuming the purchaser is still willing to pay; but if the good could be produced cheaply, then the producer would be morally required to sell it for a cheap price, regardless of the individual purchaser’s need for the good. Aquinas considered the overall market need, rather than that of a specific purchaser, when factoring in desire as a contributor to the value of a good, thus avoiding extortionate charges to a single consumer who is in great need.

Up to this point, Aquinas’s concept of a just price might not seem too dissimilar to how one might consider a fair price today. However, Aquinas’s view on interest, known then as ‘usury’, differ markedly to the present. Nowadays, charging interest on a loan is very much accepted, as the borrower is paying the lender for the opportunity to access capital or consume goods earlier than they otherwise could, while also compensating the lender for their loss of liquidity. However, as the Scholastics drew on the ideas of Plato and Aristotle, both of whom condemned the collection of interest, naturally the Scholastics were inclined to forbid any usury. Aquinas regarded usury as unjust because it was the sale “of the same thing twice”, or the sale “of what does not exist”. The Scholastics believed that money could only be exchanged or spent; thus lending money and receiving the whole sum back was just, as this fulfilled the exchange function of money. Usury, however, was not in exchange for anything, and therefore from a Scholastic point of view was unjust.

By the 16th Century, the ideas of the Scholastics were already beginning to fade from mainstream economic thinking; they were replaced by Mercantilism, a fiercely patriotic system of economic thought that focused primarily on having a balance of trade surplus to improve the wealth and power of the nation. In the present, Scholastic ideas are at best simplified, outdated versions of the current economic theory, and at worst disregarded completely. The opposition to usury and the thoughts of some scholars that a ‘just price’ would be one the maintained the societal system, ie preventing the poor tradesmen from becoming rich merchants, are examples of this. However, being able to understand where these ideas came from, and how they formed out of the issues and society that these men experienced, is still important, and as each successive economist develops upon the ideas of those before them, the influence of the Scholastics can be seen on Adam Smith and others, and the roots of modern economic theory can be traced back to them.